Incoterms 2020 Explained for UAE Importers and Exporters

Incoterms decide who pays for what and where the risk passes between seller and buyer. Pick the wrong one and you could be paying for freight you did not plan for, or carrying risk for cargo you cannot control. Here is what UAE traders need to know about the eleven Incoterms® 2020 rules.

Two groups of terms

Any mode of transport (including multimodal): EXW, FCA, CPT, CIP, DAP, DPU, DDP.

Sea and inland waterway only: FAS, FOB, CFR, CIF.

The sea-only terms assume the goods are handed over at the ship’s rail or alongside the vessel. For containerised cargo, which is usually handed to the carrier at a terminal or warehouse, the ICC recommends using FCA, CPT or CIP instead of FOB, CFR or CIF — even though the older terms remain common in practice.

The terms at a glance

Term	Seller delivers / risk passes	Main freight paid by	Insurance
EXW — Ex Works	At seller’s premises, not loaded	Buyer	Buyer’s choice
FCA — Free Carrier	To buyer’s carrier at named place	Buyer	Buyer’s choice
FAS — Free Alongside Ship	Alongside vessel at origin port	Buyer	Buyer’s choice
FOB — Free On Board	On board vessel at origin port	Buyer	Buyer’s choice
CFR — Cost and Freight	On board at origin port	Seller	Buyer’s choice
CIF — Cost, Insurance and Freight	On board at origin port	Seller	Seller (minimum cover)
CPT — Carriage Paid To	To first carrier	Seller	Buyer’s choice
CIP — Carriage and Insurance Paid To	To first carrier	Seller	Seller (all-risks level)
DAP — Delivered at Place	At named destination, ready for unloading	Seller	Seller’s choice
DPU — Delivered at Place Unloaded	At named destination, unloaded	Seller	Seller’s choice
DDP — Delivered Duty Paid	At destination, import cleared and duty paid	Seller	Seller’s choice

A key point: CIF and CFR do not move risk to destination

This catches many traders out. Under CFR and CIF, the seller pays the freight to the destination port, but risk transfers to the buyer when the goods are loaded on board at origin. If cargo is damaged at sea, the buyer claims under the insurance (CIF) or their own cover (CFR).

Choosing a term as a UAE importer

• FOB / FCA — popular with importers who want to control freight cost and timing through their own forwarder in Dubai. You see exactly what you pay for shipping.
• CIF / CFR — convenient if the supplier has good freight rates, but you lose visibility over destination charges, which can be high.
• EXW — maximum control, but you become responsible for export clearance in the seller’s country, which may be impractical.
• DAP / DDP — the supplier delivers to your door. Easy, but freight is buried in the price, and DDP requires the seller to clear UAE customs as importer — often not possible.

Choosing a term as a UAE exporter

• FCA Jebel Ali or FOB Jebel Ali — you hand over cargo at origin and leave the main freight to the buyer.
• CFR / CIF / CPT / CIP — you control the sailing and can win orders by offering a landed price to the port.
• DAP — useful for GCC road shipments where you deliver to the buyer’s warehouse.

Always name the place precisely

“FOB Dubai” is ambiguous. Write “FOB Jebel Ali Port, UAE, Incoterms® 2020” or “DAP Buyer’s warehouse, Riyadh, Incoterms® 2020”. The named place decides where costs and risk change hands.

Need help choosing?

Tell us what you are buying or selling and where. We will explain the cost difference between, say, FOB and CIF on your lane and arrange the freight to match. Explore our sea freight and customs clearance services, or request a quote.

Incoterms® is a registered trademark of the International Chamber of Commerce.